Taxation in India

According to the London journals, Indian stock and railway securities have of late been distinguished by a downward movement in that market, which is far from testifying to the genuineness of the sanguine convictions which John Bull likes to exhibit in regard to the state of the Indian guerrilla war; and which, at all events, indicates a stubborn distrust in the elasticity of Indian financial resources. As to the latter, two opposite views are propounded. On the one hand, it is affirmed that taxes in India are onerous and oppressive beyond those of any country in the world; that as a rule throughout most of the presidencies, and through those presidencies most where they have been longest under British rule., the cultivators, that is, the great body of the people of India, are in a condition of unmitigated impoverishment and dejection; that, consequently, Indian revenues have been stretched to their utmost possible limit, and Indian finances are therefore past recovery. A rather discomfortable opinion this at a period when, according to Mr. Gladstone, for some years to come, the extraordinary Indian expenditure alone will annually amount to about £20,000,000 sterling. On the other hand, it is asserted — the asseveration being made good by an array of statistical illustrations — that India is the least taxed country in the world; that, if expenditure is going on increasing, revenue may be increased too; and that it is an utter fallacy to imagine that the Indian people will not bear any new taxes. Mr. Bright, who may be considered the most arduous and influential representative of the “discomfortable” doctrine, made, on the occasion of the second reading of the new Government of India bill, the following statement:

“The Indian Government had cost more to govern India than it was possible to extort from the population of India, although the Government had been by no means scrupulous either as to the taxes imposed, or as to the mode in which they had been levied. [...] It cost more than £30,000,000 to govern India, for that was the gross revenue, and there was always a deficit, which had to be made up by loans borrowed at a high rate of interest. [...] The Indian debt now amounted to £60,000,000, and was increasing; while the credit of the Government was falling, partly because they had not treated their creditors very honorably on one or two occasions, and now on account of the calamities which had recently happened in India. [...] He had alluded to the gross revenue; but as that included the opium revenue, which was hardly a tax upon the people of India, he would take the taxation which really pressed upon them at £25,000,000. Now, let not this £25,000,000 be compared with the £60,000,000 that was raised in this country. Let the House recollect that in India it was possible to purchase twelve days’ labor for the same amount of gold or silver that would be obtained in payment for one in England. This £25,000,000 expended in the purchase of labor in India would buy as much as an outlay of £300,000,000 would procure in England. [...] He might be asked how much was the labor of an Indian worth? Well, if the labor of an Indian was only worth 2d. a day, it was clear that we could not expect him to pay as much taxation as if it was worth 2s. [...] We had 30,000,000 of population in Great Britain and Ireland; in India there were 150,000,000 inhabitants. [...] We raised here £60,000,000 sterling of taxes; in India, reckoning by the days’ labor of the people of India, we raised £300,000,000 of revenue, or five times a greater revenue than was collected at home. Looking at the fact that the population of India was five times greater than that of the British Empire, a man might say that the taxation per head in India and England was about the same, and that therefore there was no great hardship inflicted. But in England there was an incalculable power of machinery and steam, of means of transit, and of everything that capital and human invention could bring to aid the industry of a people. In India there was nothing of the kind. They had scarcely a decent road throughout India.”

Now, it must be admitted that there is something wrong in this method of comparing Indian taxes with British taxes. There is on the one side the Indian population, five times as great as the British one, and there is on the other side the Indian taxation amounting to half the British. But, then, Mr. Bright says, Indian labor is an equivalent for about one-twelfth only of British labor. Consequently £30,000,000 of taxes in India would represent £300,000,000 of taxes in Great Britain, instead of the £60,000,000 actually there raised. What then is the conclusion he ought to have arrived at? That the people of India in regard to their numerical strength pay the same taxation as the people in Great Britain, if allowance is made for the comparative poverty of the people in India, and £30,000,000 is supposed to weigh as heavily upon 150,000,000 Indians as £60,000,000 upon 30,000,000 Britons. Such being his supposition, it is certainly fallacious to turn round and say that a poor people cannot pay so much as a rich one, because the comparative poverty of the Indian people has already been taken into account in making out the statement that the Indian pays as much as the Briton. There might, in fact, another question he raised. It might be asked, whether a man who earns say 12 cents a day can be fairly expected to pay 1 cent with the same ease with which another, earning $12 a day, pays $1? Both would relatively contribute the same aliquot part of their income, but still the tax might bear in quite different proportions upon their respective necessities. Yet, Mr. Bright has not yet put the question in these terms, and, if he had, the comparison between the burden of taxation, borne by the British wages laborer on the one hand, and the British capitalist on the other, would perhaps have struck nearer home than the comparison between Indian and British taxation. Moreover, he admits himself that from the £30,000,000 of Indian taxes, the £5,000,000 constituting the opium revenue must he subtracted, since this is, properly speaking, no tax pressing upon the Indian people, but rather an export duty charged upon Chinese consumption. Then we are reminded by the apologists of the Anglo-Indian Administration that £16,000,000 of income is derived from the land revenue, or rent, which from times immemorial has belonged to the State in its capacity as supreme landlord, never constituted part of the private fortune of the cultivator, and does, in fact, no more enter into taxation, properly so called, than the rent paid by the British farmers to the British aristocracy can be said to enter British taxation. Indian taxation, according to this point of view, would stand thus:

Aggregate sum raised

£30,000,000

Deduct for opium revenue

5,000,000

Deduct for rent of land

16,000,000

Taxation proper

£9,000,000

Of this £9,000,000, again, it must he admitted that some important items, such as the post-office, the stamp duties, and the customs duties, bear in a very minute proportion on the mass of the people. Accordingly, Mr. Hendriks, in a paper recently laid before the British Statistical Society on the Finances of India, tries to prove, from Parliamentary and other official documents, that of the total revenue paid by the people of India, not more than one-fifth is at present raised by taxation, i. e., from the real income of the people; that in Bengal 27 per cent only, in the Punjaub 23 per cent only, in Madras 21 per cent only, in the North-West Provinces 17 per cent only, and in Bombay 16 per cent only of the total revenue is derived from taxation proper.

The following comparative view of the average amount of taxation derived from each inhabitant of India and the United Kingdom, during the years 1855-56, is abstracted from Mr. Hendriks’s statement:

Bengal, per head, Revenue.

...

£0 5 0 ...

Taxation proper.

£0 1 4

North-West Provinces

...

3 5 ...

Taxation proper.

0 7

Madras

...

4 7 ...

Taxation proper.

1 0

Bombay

...

8 3 ...

Taxation proper.

1 4

Punjaub

...

3 3 ...

Taxation proper.

0 9

United Kingdom

...

" " ...

Taxation proper.

1 10 0

For a different year the following estimate of the average paid by each individual to the national revenue is made by Gen. Briggs:

In England, 1852

...

£ 1 19 4

In France

...

1 12 0

In Prussia

...

0 19 3

In India, 1854

...

0 3 8½

From these statements it is inferred by the apologists of the British Administration that there is not a single country in Europe, where, even if the comparative poverty of India is taken into account, the people are so lightly taxed. Thus it seems that not only opinions with respect to Indian taxation are conflicting, but that the facts from which they purport to be drawn are themselves contradictory. On the one hand, we must admit the nominal amount of Indian taxation to be relatively small; but on the other, we might heap evidence upon evidence from Parliamentary documents, as well as from the writings of the greatest authorities on Indian affairs, all proving beyond doubt that this apparently light taxation crushes the mass of the Indian people to the dust, and that its exaction necessitates a resort to such infamies as torture, for instance. But is any other proof wanted beyond the constant and rapid increase of the Indian debt and the accumulation of Indian deficits? It will certainly not be contended that the Indian Government prefers increasing debts and deficits because it shrinks from touching too roughly upon the resources of the people. It embarks in debt, because it sees no other way to make both ends meet. In 1805 the Indian debt amounted to £25,626,631; in 1829 it reached about £34,000,000; in 1850 £47,151,018; and at present it amounts to about £60,000,000. By the by, we leave out of the count the East Indian debt contracted in England, which is also chargeable upon the East Indian revenue.

The annual deficit, which in 1805 amounted to about two and a half millions, had, under Lord Dalhousie’s administration, reached the average of five millions. Mr. George Campbell of the Bengal Civil Service, and of a mind strongly biased in favor of the Anglo-Indian administration, was obliged to avow, in 1852, that:

“Although no Oriental conquerors have ever obtained so complete an ascendency, so quiet, universal and undisputed possession of India as we have, Yet all have enriched themselves from the revenues of the country, and many have out of their abundance laid out considerable sums on works of public improvements. ... From doing this we are debarred. ...The quantity of the whole burden is by no means diminished” (under the English rule), “yet we have no surplus.”

In estimating the burden of taxation, its nominal amount must not fall heavier into the balance than the method of raising it and the manner of employing it. The former is detestable in India, and in the branch of the land-tax, for instance, wastes perhaps more produce than it gets. As to the application of the taxes, it will suffice to say that no part of them is returned to the people in works of public utility, more indispensable in Asiatic countries than anywhere else, and that, as Mr. Bright justly remarked, nowhere so extravagant is a provision made for the governing class itself.